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Industry Leader INDUSTRY LEADER What Drives Innovation Today? C hange in the biopharmaceutical industry is the new norm prompted by several notable patent expiries of billion-dollar blockbusters. In the United States alone, there were 13 companies that from 2008 to 2012 each saw over $5 billion in revenue lost because of patent expiration of their major products. In response, Big Pharma companies have consolidated (e.g. Merck/Schering Plough, Pfizer/ Wyeth, Roche/Genentech) and focused their efforts on shoring up their late-stage pipelines, often through in-licensing or marketing collaborations with biotech and other niche companies. The Affordable Care Act has medical reimbursement payers increasing their scrutiny of what drugs make it onto formulary lists; incremental improvements in efficacy are not enough. Consequently, during these tough economic times, the biopharmaceutical industry must take a more thoughtful approach to drug development that maximizes return on investment rather than the more speculative high-risk/high-reward strategies of the past. Drug candidates can no longer be just "me-too" copies. Developing new types of drug candidates requires innovative study designs that on the one hand must be highly customized but on the other still costeffective — even commodity-priced. This is particularly true in the preclinical development space. The challenge now lies in finding new ways to stay innovative while bringing new drugs to market. THE DIFFERENT DEGREES OF PARTNERING The FDA is encouraging innovative drug development by introducing the concept of "breakthrough" drug status that offers a collaborative approach to speed 62 LifeScienceLeader.com such drugs to the market faster. To be competitive, biopharmaceutical companies need to implement more efficient processes that reduce their R&D; budgets while simultaneously increasing the productivity of their R&D; groups. It would appear that our industry has begun to respond because more new molecular entities (NMEs) were approved in the United States in 2012 than in any year since 1999. To sustain this pace, the industry has turned to a variety of partnering opportunities, with biopharmaceutical companies frequently seeking partners that are willing to share the rewards and risks of drug development. Core functions once kept in-house are now being performed through collaborations with academic research organizations, specialty biotech companies, and CROs. For example, the outsourcing of preclinical safety assessment studies is a common practice. However, the increased demands of today's drug development environment require that toxicology studies incorporate molecular biomarkers, imaging, and companion diagnostics to provide better safety profiles for drug candidates. One innovative modality is molecular imaging (MI), which provides investigators with an early-stage solution to assess exposure at the target site, binding to the target of interest and expression of the desired pharmacology. Indeed, some companies have almost entirely outsourced their drug discovery operations, replacing internal lab capacity with partnerships throughout the world. Others outsource selected steps in the drug discovery process such as hit confirmation, lead generation, lead optimization, and/or exploratory safety studies. PARTNERING TO SPUR INNOVATION The partnering model is all about creating November 2013 Roger Hayes, Ph.D. Hayes is VP and GM of laboratory sciences at MPI Research. For nearly two decades, he has led strategic and research initiatives for large pharmaceutical companies that included both GLP and non-GLP preclinical studies as well as clinical trials. efficiency — allowing a biopharmaceutical company to continue to innovate and evolve its science while operating more efficiently than its competitors. Likewise, any outsourcing partner needs to be an extension of the sponsor's internal team and, as such, be innovators in their own right. In fact, outsourcing partners are becoming fertile grounds for innovation. The application of knowledge gained from dealing with a diverse array of sponsors and their programs offers unrivaled opportunities for creative thinking on a new program. While biopharmaceutical companies might be dealing with one or two chemical scaffolds for a specific therapeutic area, an outsourcing partner might have to deal with hundreds of unique molecular entities in a year. As the biopharmaceutical industry continues to evolve, the need to maximize the value of internal operations and free up R&D; dollars is paramount to fostering innovation. To stay successful, companies are being forced to reevaluate what services/programs they need to maintain in-house, and for those that don't make the cut, the solution will continue to be enlisting the help of outsourcing partners such as academic research organizations, specialty biotech companies, and CROs — and challenging them to be the engines of innovation.